Stockholders' Equity

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Stockholders' Equity

9.Stockholders’ Equity

Stock Option and Incentive Plans

Under the Company’s current 2018 Stock Option and Incentive Plan (the “2018 Plan”), the number of shares of the Company’s common stock that were reserved and available for issuance is 2,778,000, plus the number of shares of common stock that were available for issuance under the Company’s previous equity plans. The shares of common stock underlying any awards under the 2018 Plan and previous equity plans (together, the “Plans”) that are forfeited, canceled or otherwise terminated (other than by

exercise) shall be added back to the shares of stock available for issuance under the 2018 Plan. At September 30, 2023, 1,704,118 shares were available for future grants under the 2018 Plan.

Stock Issued for Earnout Payment

In May 2023, the Company issued 42,621 shares of its common stock to former securityholders of Avitide to satisfy the contingent consideration obligation established under the Agreement and Plan of Merger and Reorganization (the "Avitide Agreement") which the Company entered into as part of the acquisition of Avitide in September 2021. See Note 4, "Acquisitions", included in Part II, Item 8 "Financial Statements and Supplemental Data" to our Form 10-K, for additional information on the acquisition of Avitide and the contingent consideration. The shares represent 50% of the earnout consideration earned in the First Earnout Year (as defined in the Avitide Agreement).

Stock-Based Compensation

The following table presents stock-based compensation expense in the Company’s condensed consolidated statements of comprehensive income:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Amounts in thousands)
Cost of product revenue	$	393	$	610	$	1,506	$	1,847
Research and development		700		534		2,095		1,955
Selling, general and administrative		5,280		5,010		15,509		17,252
Total stock-based compensation	$	6,373	$	6,154	$	19,110	$	21,054

Stock Options

Information regarding option activity for the nine months ended September 30, 2023 under the Plans is summarized below:

	Shares			Weighted average exercise price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Options outstanding at December 31, 2022		609,965		$	71.74
Granted		66,069		$	173.08
Exercised		(22,872	)	$	15.52
Forfeited/expired/cancelled		(2,000	)	$	199.71
Options outstanding at September 30, 2023		651,162		$	83.60
Options exercisable at September 30, 2023		371,782		$	61.46
Vested and expected to vest at September 30, 2023(1)		637,673		$	83.18		5.73	$	53,173

(1)Represents the number of vested options as of September 30, 2023 plus the number of unvested options expected to vest as of September 30, 2023 based on the unvested outstanding options at September 30, 2023 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on September 30, 2023, the last business day of the third quarter of 2023, of $159.01 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on September 30, 2023. The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2023 and 2022 was $3.4 million and $9.8 million, respectively.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022 was $85.70 and $76.64, respectively.

Stock Units

The fair value of stock units is calculated using the closing price of the Company’s common stock on the date of grant. The Company recognizes expense on awards with service-based vesting over the employee’s requisite service period on a straight-line basis. The Company recognizes expense on performance-based awards over the vesting period based on the probability that the performance metrics will be achieved. Information regarding stock unit activity, which includes activity for restricted stock units and performance stock units, for the nine months ended September 30, 2023 under the Plans is summarized below:

	Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2022		531,034		$	142.57
Awarded		175,475		$	174.86
Vested		(173,714	)	$	118.70
Forfeited/cancelled		(53,920	)	$	179.53
Unvested at September 30, 2023		478,875		$	188.41
Vested and expected to vest at September 30, 2023(1)		411,646		$	153.79

(1)Represents the number of vested stock units as of September 30, 2023 plus the number of unvested stock units expected to vest as of September 30, 2023 based on the unvested outstanding stock units at September 30, 2023 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value of stock units vested during the nine months ended September 30, 2023 and 2022 was $32.3 million and $40.4 million, respectively.

The weighted average grant date fair value of stock units granted during the nine months ended September 30, 2023 and 2022 was $174.86 and $191.55, respectively.

As of September 30, 2023, there was $66.0 million of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 2.88 years. The Company expects 2,156,681 unvested options and stock units to vest over the next five years.